Jos. A. Bank and Men’s Wearhouse to Begin Talks

Advisers for the two retail chains are set to begin discussions regarding a possible merger.

Advisers for Jos. A. Bank Clothiers Inc. and The Men’s Wearhouse Inc. are set to begin discussions regarding a possible combination of the two chains.

Douglas Ewert, chief executive officer and president of Men’s Wearhouse, in a written response Friday to the letter sent by Jos. A. Bank chairman Robert Wildrick a day earlier, said he would be returning a signed confidentiality agreement, with a few minor changes, to his competitor as the first step before discussions and due diligence can begin.

He also said that Jos. A. Bank’s preference for a cash deal wouldn’t be a problem since that’s the same one Men’s Wearhouse has envisioned.

Ewert said his team will reach out to its counterpart at Jos. A. Bank to set up a schedule for talks.

The current Men’s Wearhouse offer for Jos. A. Bank is $63.50 a share, which Jos. A. Bank rejected, even though it said it was open to talks. Men’s Wearhouse said it was willing to go as high as $65 a share, subject to certain conditions, such as completion of due diligence and Jos. A. Bank dropping its $825 million bid to acquire Eddie Bauer Holdings Inc. from Golden Gate Capital. A transaction at $65 a share would bring the total value of a deal up to $1.8 billion.

Shares of Jos. A. Bank continued their ascent Friday, rising 3 percent to close at $62.08 in Nasdaq trading, while shares of Men’s Wearhouse shot up 6.7 percent to $53.79 in Big Board trading.

Investors seem to prefer a Jos. A. Bank deal involving Men’s Wearhouse to one with Eddie Bauer. That’s a function of wanting the certainty of today over the promise of tomorrow. It’s easier to determine the immediate synergies in a combination with Men’s Wearhouse, even though at some point the risk is how to grow two already mature brands. With Eddie Bauer, the projections for gains are based merely on a presumption that the perceived early turnaround of the chain will gain momentum.